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Five ways to pay off your mortgage earlier

Five ways to pay off your mortgage earlier

With the increase in bank mortgage rates late last year, combined with the shaky economic start to 2016, there has never been a better time for Aussies to starting things about how to pay off their mortgage earlier.

Not only would you make more savings, but the opportunity to pay off a mortgage early also frees up funds to invest in other assets, or simply reach financial freedom sooner.

Here are five ways to pay off your mortgage faster in 2016

Find a better deal

If your mortgage loan no longer matches your situation, shop around for something better.

A broker can help you refinance your loan, get better lender fees and find a better rate.

Also read: Lock in now! Stock selloff sinks mortgage rates

Pay more

The simplest way to pay of a loan faster is to just pay more – a minimum repayment is just that, for most loans there is no reason why you can’t pay more.

By rounding up to a full number, or contributing a little extra $10 or $100 on those days when you have funds to space, Aussies can significantly reduce their mortgage.

Smaller payments more often

Alternatively, another simple way to reduce the size of mortgage repayments is to make more of them.

By considering fortnightly, or weekly, repayments in replace of monthly repayments, Aussie’s can ultimately pay less interest while also pay off a loan faster.

Use an offset account

A mortgage offset account is linked to your loan and means the montly interest payable is calculated by deducting what is in your offset account from your current loan.

Also read: Westpac blames new rules for mortgage hike

An offset account has the added bonus of saving on interest payable while still giving access to your savings.

Keep repayments steady

Don’t decrease mortgage repayments when interest rates fall.

By keeping your repayments steady you will ultimately pay down more principle with each payment and therefore make more progress on paying off your loan faster.

 

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